House Prices Slashed by 1 in 5 Sellers Nationwide

A home available for sale is shown on May 22, 2024 in Austin, Texas.

Home sales in the U.S. dropped to one of their lowest levels on record in May, according to a recent Redfin report, despite nearly one in five sellers slashing their list prices last month in an attempt to attract reluctant buyers.

Some 19.2 percent of homes for sale in May nationwide had a price cut, according to the real estate brokerage, up from 13.2 percent compared to a year earlier and just a few percentage points shy of the record share of 21.7 percent set in October 2022.

Sellers likely slashed prices because they had asked for too much money for their properties in the first place. According to Redfin, the typical home for sale in the U.S. in May spent 32 days on the market—an amount of time that would qualify that listing as a "stale" one. It's the highest level for May—still within the spring homebuying season—since the start of the COVID-19 pandemic.

Another Redfin report released earlier this month found that more than three in five home listings in the U.S. are now considered "stale" as they're sitting idle on the market for longer than 30 days.

Lower prices have failed to attract buyers, as shown by the latest home sales data. Home sales fell 1.7 percent between April and May on a seasonally adjusted basis, while they dropped by an even deeper 2.9 percent compared to a year earlier.

But why aren't lower prices translating into more purchases? The explanation might have something to do with mortgage rates, which are still hovering around the 7 percent mark. According to the latest data from Freddie Mac, the 30-year-old fixed-rate mortgage was 6.95 percent as of June 13. The 15-year-old fixed-rate mortgage was 6.17 percent.

Only two months in the past decade have reported lower numbers of home sales: October 2023 and May 2020, when mortgage rates jumped to a 23-year high and the beginning of the pandemic, respectively.

The high cost of housing—including mortgage rates, insurance, and maintenance fees among other factors—is still a big obstacle for buyers hunting for a new home, as willing as they may be. This is because, despite dwindling sales, home prices at the national level are still growing.

The median sale U.S. home sale price hit a record $436,716 in May, up 5.1 percent compared to a year earlier. This rise in prices can mainly be linked to the fact that demand for housing in the U.S. still crucially outpaces supply, as the country chronically underbuilt following the Great Recession of 2007-2008.

New listings rose 0.3 percent between April and May—an improvement that lacks the capacity to have a significant impact on the imbalance between demand and inventory.

"Buyers today are facing many of the realities of a hot market even though few homes are changing hands," said Redfin Senior Economist Elijah de la Campa in a press release. "Sales are sluggish because high homebuying costs are making both house hunters and prospective sellers skittish. And with so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs."

The majority of sellers who slashed prices for their listed properties were, in fact, focused in Texas and Florida—the two states that have had the highest numbers of new homes in the past few years.

"In these areas, individual home sellers have been facing strong competition from homebuilders," the Redfin report states.

Three of the ten metros with the highest shares of price drops in May were in Florida and three were in Texas.

The biggest share of listings with a price cut was in Indianapolis, Indiana (48.1 percent), followed by Tampa, Florida (45.2 percent), and Denver, Colorado (44.8 percent). Newsweek contacted Redfin for more information by email early on Tuesday.

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